India’s gold imports fell sharply by 76 per cent to 60 tonnes in the April-July period this fiscal on high import duty and other taxes, according to gold and silver refiner MMTC-PAMP.
However, India imported around 80 tonnes of gold through unofficial channels in these four months in the wake of high import duty of 10 per cent, it noted.
“Unless and until customs duty is reduced to 3-4 per cent, this trend of unofficial imports will continue,” MMTC-PAMP Managing Director Rajesh Khosla told PTI on the sidelines of a three-day India International Gold Convention.
Falling gold imports may be a great news to the government as it is helping keep current account deficit under check but it seems nobody is bothered about growing smuggling of the yellow metal, he said.
The country’s total official gold imports declined to 60 tonnes in April-July of this fiscal, much lower than 250 tonnes in the year-ago period, he added.
Khosla also said even gold imports by MMTC-PAMP have fallen to mere 5 tonnes during the period as against 50 tonnes a year ago.
“There are combination of factors for the fall in imports. One is high customs duty, resulting in smuggling and also incentivising people to export sub-standard jewellery,” he added.
Imports are down also because local traders are clearing unaccounted stock after introduction of 1 per cent excise duty, Khosla said.
“Now traders are clearing stock which is not in their books. In a haste to clear the stock, they are selling at a 3-4 per cent discounted rates despite global prices are ruling high. This has affected the imports,” he said.
As a result, the bullion industry is not keen to import and sell at a discounted price, he added.
“As a refiner, MMTC-PAMP is finding it difficult to sell at such a discounted rate. So, we have scaled down our operations,” Khosla said.
He said the company may import maximum 10 tonnes this fiscal as against 120 tonnes last year, if the current trend continues.
Otherwise, the MMTC-PAMP — which is a JV between state-run MMTC and Switzerland’s PAMP — has an installed capacity to refine 200 tonnes of gold and 600 tonnes per annum. It has a capacity to mint 2.5 million pieces of gold and silver.
India, the world’s second biggest gold consumer after China, imported 650 tonnes in the 2015-16 fiscal.